Federal tax cuts are one way governments can help renewable energy grow in both the residential and business sectors.
It’s no secret that renewable energy has been reaching new heights recently. In fact, 76 percent of American consumers agree that it’s smart to pursue more options as a country. But how do we convince long-time coal and oil users that renewable energy will be worth their while?
The most agreed-upon solution have been tax breaks and incentives. There’s no denying that many people are motivated by money — and for a good reason. If you could save when switching to renewable energy, you’d be more inclined to take that leap, right?
In other words, we might only be able to make significant progress when using tactics like tax cuts to motivate individuals and businesses. It’s always a positive feeling when you can save on energy costs every month. Take a look at why we need federal tax cuts to expand renewable energy.
What tax incentive options exist for residents and businesses? There are a few different choices that consumers can explore. You can claim tax benefits when making improvements or installing appliances that boost a building’s efficiency. Individuals need to explore each opportunity’s details so that they know they’ve met specific qualifications.
If you’re a homeowner, you can claim three Residential Renewable Energy Tax Credit percentages. This step takes place after installing geothermal, wind, solar or fuel cell energy and registering said system with a local power company. The percentages include:
- 22% for homes serviced after Dec. 31, 2020, but before Jan. 1, 2022
- 26% for homes serviced after Dec. 31, 2019, but before Jan. 1, 2021
- 30% for homes serviced after Dec. 31, 2016, but before Jan. 1, 2020
Equipment like wind turbines and solar panels are eligible for these tax breaks. The one you receive will be a percentage of your renewable energy installation costs. These tax credits aren’t refundable, but they carry over to next year’s tax return when applicable. It should be possible to pursue these tax credits even when you use another heating source, for example.
As a business, you might qualify for Business Energy Investment Tax Credit (ITC) benefits. There’s also a Federal Production Tax Credit (PTC). Each provides separate yet intertwining opportunities for business owners:
- The ITC decreases federal income taxes for those who put money into renewable energy projects. You get a tax benefit for how much you spend on installing a feature like solar power.
- The PTC cuts federal income taxes for companies that use grid-connected renewable energy. This option grants a payout based on how much renewable energy you use.
It’s smart for businesses to look into specific possibilities so that they know how to qualify
The advantages are clear. If you can subsidize your home or business’s renewable energy pursuits, you’ll be more likely to commit to these alternatives completely. It’s always beneficial to save money while you work toward a greener future.
This point doesn’t mean there aren’t obstacles we need to overcome. The main two hurdles are government-backed pursuits and education limitations. If we want to achieve maximum potential, we need to ensure renewable energy tax cuts are accessible for every person.
The government isn’t always on board with incentives. In fact, you won’t be able to receive any solar power tax benefits whatsoever after 2022 — and you can only qualify for a 22% credit before then. That’s only one tax credit set to decrease and expire over these next few years. It’s up to Congress to renew those cuts.
How much do you know about renewable energy tax breaks? There’s a chance that you didn’t know any specifics before you looked online. That’s a problem. If we don’t make tax credits easier to understand and more widely-available, we can’t ensure their effectiveness. People who already care about sustainability are more likely to pursue these benefits.
Therefore, we need to prioritize these two points. There’s no denying that individuals and companies can use tax incentives to support their renewable energy endeavors. As long as these options are available and accessible, Americans will be more likely to move away from fossil fuels.
It’s true that more Americans want to pursue renewable energy as a country. However, we won’t be able to achieve widespread adoption unless we give people reasons to switch. It’s apparent that climate change awareness isn’t enough — and we have to meet people halfway as sustainability becomes increasingly necessary.
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